Last-Minute CU Lobby to Derail New Overdraft Protection Curbs

WASHINGTON – Credit union lobbyists were working yesterday as a key vote loomed to convince members of the House Financial Services Committee that a bill to reign in abuses on overdraft protection could force thousands of credit unions to abandon the practice. NAFCU lobbyists were telling members of the committee as they were preparing to vote on the bill that counting fees in the annual percentage rate for the service could make it prohibitive for credit unions to offer because the resulting rate would exceed the 18% federal cap on credit union loans. Ironically, a move to pass new curbs on the service is being fueled in Congress by the credit union-backed Center for Responsible Lending, which has produced data showing that overdraft protection fees charged by credit unions and banks exceed the amount of money credit unions and banks lend to cover actual overdrafts. The Center, which is owned by Self-Help CU, is backing the bill expected to be voted today by the Financial Services Committee which would bring overdraft protection under the Truth In Savings Act, requiring that fees be computed as part of the annual percentage rate; that consumers be required to opt-in to overdraft protection programs; and that fees and rates be clearly disclosed.